Paul Mueller Company Announces Its First Quarter Earnings of 2022

Rhea-AI Summary

Paul Mueller Company (OTC: MUEL) reported a net loss of $1.1 million for Q1 2022, down from a net income of $1.3 million in Q1 2021. Net sales decreased to $40.8 million compared to $45.3 million last year. This decline is attributed to the absence of Mueller Field Operations and a slowdown in the pharmaceutical segment. The company noted that the backlog reached a record $130.8 million, indicating potential revenue growth ahead. However, earnings were negatively impacted by a $2.1 million increase in the LIFO reserve due to inflation.

Positive

• Backlog at record $130.8 million, up 130% YoY, indicating strong future orders.
• Net income improved for the trailing twelve months by $6.7 million.

Negative

• Q1 2022 net loss of $1.1 million compared to a net income of $1.3 million in Q1 2021.
• Net sales decreased from $45.3 million to $40.8 million due to loss of Mueller Field Operations.
• Earnings dampened by $2.1 million increase in the LIFO reserve from inflation.

SPRINGFIELD, Mo., April 29, 2022 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended March 31, 2022.

PAUL MUELLER COMPANY
THREE-MONTH REPORT
Unaudited
(In thousands)
CONSOLIDATED STATEMENTS OF INCOME
			Three Months Ended								Twelve Months Ended
			March 31								March 31
			2022				2021				2022				2021
Net Sales			$	40,775			$	45,279			$	180,109			$	204,235
Cost of Sales				31,861				31,838				136,190				141,852
Gross Profit			$	8,914			$	13,441			$	43,919			$	62,383
Selling, General and Administrative Expense				10,240				11,308				42,816				44,958
Goodwill Impairment Expense				-				-				-				15,397
Operating Income (Loss)			$	(1,326	)		$	2,133			$	1,103			$	2,028
Interest Expense				(388	)			(451	)			(679	)			(828	)
PPP Loan Forgiveness				-				-				1,884				-
Other Income				264				38				3,070				809
Income (Loss) before Provision (Benefit) for Income Taxes			$	(1,450	)		$	1,720			$	5,378			$	2,009
Provision (Benefit) for Income Taxes				(328	)			419				800				4,140
Net Income (Loss)			$	(1,122	)		$	1,301			$	4,578			$	(2,131	)
Earnings (Loss) per Common Share ––	Basic		$	(1.03	)		$	1.19			$	4.22			$	(1.94	)
	Diluted		$	(1.03	)		$	1.19			$	4.22			$	(1.94	)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	Three Months Ended
	March 31
		2022				2021
Net Income (Loss)	$	(1,122	)		$	1,301
Other Comprehensive Income (Loss), Net of Tax:
Foreign Currency Translation Adjustment		(482	)			(1,275	)
Comprehensive Income (Loss)	$	(1,604	)		$	26

CONSOLIDATED BALANCE SHEETS
	March 31				December 31
		2022				2021
Cash and Short-Term Investments	$	12,513			$	11,281
Accounts Receivable		23,747				25,774
Inventories		32,427				26,454
Current Net Investments in Sales-Type Leases		22				23
Other Current Assets		2,474				1,814
Current Assets	$	71,183			$	65,346
Net Property, Plant, and Equipment		40,913				41,250
Right of Use Assets		2,481				2,526
Other Assets		7,650				7,003
Long-Term Net Investments in Sales-Type Leases		193				164
Total Assets	$	122,420			$	116,289
Accounts Payable	$	14,137			$	14,470
Current Maturities and Short-Term debt		1,310				1,330
Current Lease Liabilities		471				483
Other Current Liabilities		36,914				27,691
Current Liabilities	$	52,832			$	43,974
Long-Term Debt		13,723				14,241
Long-Term Pension Liabilities		17,083				18,036
Other Long-Term Liabilities		2,450				1,848
Lease Liabilities		844				897
Total Liabilities	$	86,932			$	78,996
Shareholders' Investment		35,488				37,293
Total Liabilities and Shareholders' Investment	$	122,420			$	116,289

SELECTED FINANCIAL DATA
	March 31				December 31
		2022				2021
Book Value per Common Share	$	32.69			$	34.32
Total Shares Outstanding		1,085,711				1,086,661
Backlog	$	130,763			$	78,357

CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
	Common Stock				Paid-in Surplus				Retained Earnings				Treasury Stock				Accumulated Other Comprehensive Income (Loss)					Total
Balance, December 31, 2021	$	1,508			$	9,708			$	72,764			$	(10,749	)		$	(35,938	)			$	37,293
Add (Deduct):
Net Income (Loss)										(1,122	)												(1,122	)
Other Comprehensive Income (Loss), Net of Tax																		(482	)				(482	)
Dividends, $.15 per Common Share										(163	)												(163	)
Treasury Stock Acquisition														(38	)								(38	)
Balance, March 31, 2022	$	1,508			$	9,708			$	71,479			$	(10,787	)		$	(36,420	)			$	35,488

CONSOLIDATED STATEMENT OF CASH FLOWS
	Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
Operating Activities:
Net Income (Loss)	$	(1,122	)		$	1,301
Adjustment to Reconcile Net Income to Net Cash Provided (Required) by Operating Activities:
Pension Contributions (Greater) Less than Expense		(953	)			(960	)
Bad Debt Expense (Recovery)		(4	)			(32	)
Depreciation & Amortization		1,503				1,652
(Gain) Loss on Sales of Equipment		(1	)			(3	)
Change in Assets and Liabilities
Dec (Inc) in Accts and Notes Receivable		2,031				(1,460	)
(Inc) Dec in Cost in Excess of Estimated Earnings and Billings		-				(478	)
(Inc) in Inventories		(5,129	)			(3,213	)
(Inc) in Prepayments		(660	)			(118	)
(Inc) in Net Investment in Sales-type leases		(28	)			(15	)
Dec (Inc) in Other LT Assets		13				(72	)
(Dec) Inc in Accounts Payable		(152	)			2,225
(Dec) in Accrued Income Tax		(1	)			-
Inc (Dec) in Other Accrued Expenses		705				(4,131	)
Inc in Advanced Billings		8,142				5,580
Inc (Dec) in Billings in Excess of Costs and Estimated Earnings		377				(1,204	)
Inc in Lease Liability for Operating		90				24
Inc in Lease Liability for Financing		-				43
Principal payments of Lease Liability for Operating		(73	)			(69	)
(Dec) in Long Term Liabilities		(24	)			(72	)
Net Cash Provided (Required) by Operating Activities	$	4,714			$	(1,002	)
Investing Activities
Proceeds from Sales of Equipment		1				9
Additions to Property, Plant, and Equipment		(1,935	)			(812	)
Net Cash (Required) for Investing Activities	$	(1,934	)		$	(803	)
Financing Activities
Principal payments of Lease Liability for Financing		(57	)			(69	)
(Repayment) of Short-Term Borrowings, Net		-				(605	)
(Repayment) of Long-Term Debt		(380	)			(353	)
Dividends Paid		(163	)			-
Treasury Stock Acquisitions		(38	)			(4,001	)
Net Cash (Required) for Financing Activities	$	(638	)		$	(5,028	)
Effect of Exchange Rate Changes		(910	)			(551	)
Net Increase (Decrease) in Cash and Cash Equivalents	$	1,232			$	(7,384	)
Cash and Cash Equivalents at Beginning of Year		11,281				22,943
Cash and Cash Equivalents at End of Quarter	$	12,513			$	15,559

PAUL MUELLER COMPANY
SUMMARIZED NOTES TO THE FINANCIAL STATEMENTS
(In thousands)

A. The chart below depicts the net revenue on a consolidating basis for the three months ended March 31.

Three Months Ended March 31
Revenue		2022				2021
Domestic	$	28,116			$	33,497
Mueller BV	$	12,980			$	12,027
Eliminations	$	(321	)		$	(245	)
Net Revenue	$	40,775			$	45,279

The chart below depicts the net revenue on a consolidating basis for the twelve months ended March 31.

Twelve Months Ended March 31
Revenue		2022				2021
Domestic	$	131,698			$	158,761
Mueller BV	$	49,773			$	46,439
Eliminations	$	(1,362	)		$	(965	)
Net Revenue	$	180,109			$	204,235

The chart below depicts the net income on a consolidating basis for the three months ended March 31.

Three Months Ended March 31
Net Income		2022				2021
Domestic	$	(885	)		$	1,683
Mueller BV	$	(238	)		$	(394	)
Eliminations	$	1			$	12
Net Income	$	(1,122	)		$	1,301

The chart below depicts the net income on a consolidating basis for the twelve months ended March 31.

Twelve Months Ended March 31
Net Income		2022				2021
Domestic	$	4,760			$	12,942
Mueller BV	$	(209	)		$	(15,098	)
Eliminations	$	27			$	25
Net Income	$	4,578			$	(2,131	)

B. Key headlines for the quarter,

• Backlog is at an all-time high with much of this increase to be realized in the last half of this year and the first part of 2023.
  
• The year has started out slower than expected. Shortage or delay of key components and cost increases against older backlog have contributed to this slow start and lower margins.
• Earnings were dampened by a $2.1 million increase in the LIFO reserve from general inflation and an increase in inventory from planned early purchases to protect margin.
• Finding enough qualified workers to meet our backlog is our greatest challenge.

C. The following backlog comparisons exclude Mueller Field Operations which was sold on December 31, 2021. March 31, 2022 backlog is $130.8 million compared to $78.4 million at December 31, 2021 and $59.3 million at March 31, 2021. All business segments have higher backlogs than a year ago especially the pharmaceutical group in the U.S. which received a large order in February, 2022. The U.S. backlog is up 130% from a year ago to $118.4 million, the largest in our history. In the Netherlands, the backlog is up 54% from March 31, 2021, to $13.0 million.

D. Revenue is down to last year at three months and twelve months primarily from Mueller Field Operations no longer being part of the Company and from the pharmaceutical group which was finishing a large project in the first quarter of 2021. We anticipate the revenue shortfall from the slow start in 2022 to be reduced later in the year as the current large backlog is being produced.

E. Similar to revenue, net income is down $2.4 million for the three months primarily from lower earnings from the pharmaceutical groups and a greater negative affect by the increase in the LIFO reserve by $1.2 million (pretax).

Net Income was improved for the trailing twelve months by $6.7 million. In the U.S., earnings were down by $8.2 million. The pretax effect of LIFO was $4.7 million of this negative variance but was offset by the pretax gain of $1.9 million from the forgiveness of the PPP loan and $2.9 million pretax gain on the sale of Mueller Field Operations. The remainder of the negative variance is primarily from the large pharmaceutical order manufactured in 2020 and finishing in early 2021 and the large juice storage facility project for Mueller Field Operations which was profitable for the first part of the project in 2020, but had warranty issues as the job was nearing completion in 2021. Mueller BV was favorable by $15.3 million due to the goodwill impairment of $15.4 million at the end of 2020.

F. The pre-tax results for the three months ended March 31, 2022, were unfavorably affected by $2.1 million increase in the LIFO reserve. The pre-tax results for the twelve months ended March 31, 2022 were unfavorably affected by $5.2 million increase in the LIFO reserve. The pre-tax results for three months ended March 31, 2021, were unfavorably affected by $0.9 million increase in the LIFO reserve. The pre-tax results for the twelve months ended March 31, 2021, were unfavorably affected by $0.5 million increase in the LIFO reserve.

G. The consolidated financials are affected by the euro to dollar exchange rate when consolidating Mueller B.V., the Dutch subsidiary. The month-end euro to dollar exchange rate was 1.17 for March, 2021; 1.13 for December, 2021 and 1.11 for March, 2022, respectively.

This press release contains forward-looking statements that provide current expectations of future events based on certain assumptions. All statements regarding future performance growth, conditions, or developments are forward-looking statements. Actual future results may differ materially from those described in the forward-looking statements due to a variety of factors, including, but not limited to, the factors described in the Company’s Annual Report under “Safe Harbor for Forward-Looking Statements”, which is available at paulmueller.com. The Company expressly disclaims any obligation or undertaking to update these forward-looking statements to reflect any future events or circumstances.

The accounting policies related to this report and additional management discussion and analysis are provided in the 2021 annual report, available at
www.paulmueller.com.

Press Contact: Ken Jeffries | Paul Mueller Company | Springfield, MO 65802 | (417) 575-9346

kjeffries@paulmueller.com | https://paulmueller.com

FAQ

What were Paul Mueller Company's earnings results for Q1 2022?

Paul Mueller Company reported a net loss of $1.1 million for Q1 2022, down from a net income of $1.3 million in Q1 2021.

How did the backlog change for Paul Mueller Company?

The backlog for Paul Mueller Company rose to a record $130.8 million in Q1 2022, an increase of 130% compared to the previous year.

What were the net sales for Paul Mueller Company in Q1 2022?

Net sales for Q1 2022 were $40.8 million, a decrease from $45.3 million in Q1 2021.

What impact did LIFO reserves have on earnings for Paul Mueller Company?

Earnings were negatively impacted by a $2.1 million increase in the LIFO reserve due to inflation.